RBL Bank continues to earn a BUY rating with a target price of ₹350. That's a solid 15% upside from the current price of ₹304.
The big story here isn't quarterly numbers. It's the proposed $3 billion investment by Emirates NBD for a majority 60% stake, making them the promoter. This deal fundamentally changes RBL's growth trajectory.
Three factors drive conviction in this mid-sized private lender:
The Emirates NBD Deal Changes Everything
Post the capital infusion, RBL's net worth will surge to approximately ₹420-445 billion. That's serious firepower. The transaction also involves amalgamating ENBD's India branches with RBL via a share swap, bumping ENBD's pro forma stake to 62%.
What does RBL get from this partnership? Potential credit rating upgrades from AA– to AAA, reduced funding costs, access to the sizeable GCC–India remittance corridor for NRI deposits, and enhanced capacity for large-ticket corporate lending. Plus uplift across transaction banking, treasury, syndication, wealth management, and risk capabilities.
A Partner With Serious Firepower
Emirates NBD isn't some small player. This is one of the GCC's largest and most profitable banks with ₹970 billion in income and ₹506 billion in net profit in CY24. They're backed by the Dubai government (56% stake) and operate across 13 countries. Their CY24 ROA stood at 2.5% and ROE at 21.8%.
Total assets rose 19% YoY to ₹26.4 trillion in CY25YTD. The loan book sits at ₹15 trillion with strong CASA-led funding. Capital adequacy at 17% provides solid growth headroom. NPL ratio at 2.5% with 160% coverage shows disciplined risk management.
Asset Quality Is Recovering
GNPA ratio improved 56bp over the past year to 2.32% in 2QFY26. NNPA came down 22bp to 0.57%. MFI collection efficiency has improved closer to normalcy in Nov'25 and portfolio growth has resumed. The aggressive provisioning policy means near-term pain, but credit costs should ease going forward.
Current net worth sits around ₹155 billion. Post-deal, this jumps to ₹420-445 billion. CET-1 ratio will surge to approximately 35%. That's an absurd amount of capital headroom for a bank this size.
2. Credit Market Share Ambitions
Management sees credit market share rising from 0.5% toward 1% over the medium term. With fresh capital, RBL can finally compete for larger deals while scaling existing businesses and unlocking new growth engines like NRI banking, trade flows, wealth management, and cross-border corporate business.
3. New Business Opportunities
The GCC-India remittance corridor is massive. NRI deposits, trade finance, and cross-border corporate banking become real opportunities rather than pipe dreams.
Recent Performance: The Numbers
What's Working
Loan Growth: Advances grew 14.4% YoY to ₹1 trillion in 2QFY26 with balanced momentum across businesses.
Asset Quality Improvement: GNPA at 2.32% (down 46bp QoQ), NNPA at 0.57%. PCR stands at 75.9%.
NIM Recovery Signs: NIM came in at 4.51% in 2QFY26, up 1bp QoQ. Management expects NIMs to improve by 10-15bp every quarter, reaching 4.7-4.8% by 4QFY26.
Deposit Growth: Deposit base grew 8.1% YoY to ₹1.2 trillion.
CASA Moderation: CASA mix at 31.9%, down from higher levels.
Cost-to-Income Elevated: C/I ratio at 70.7% in 2QFY26 due to business investments.
Credit Card Stress: Slippages in credit cards and personal loans remain elevated. May take a couple of quarters to normalize.
MFI Exposure: Mix at 5.9% vs peak of 12.2% four years ago. Bank has consciously moderated this.
Other Income Hit: MTM loss of ₹440 million on unlisted equities and lower treasury gains in 2QFY26.
Segment Performance: Where the Action Is
1. Retail Business (60% of mix)
The core engine. Bank has consciously moderated unsecured business growth in response to elevated risk but intends to resume when credit environment normalizes.
2. Growth Levers
New MSME product launches, scale-up in gold lending, SME and mid-corporate businesses, targeted expansion in tractors, affordable housing and secured business loans.
3. Cards Business
Market share in cards at 4.0%, spending share at 3.7%. Down from 5.2% peaks but stabilizing.
Financial Outlook: FY26-28
Strong growth with improving profitability once the ENBD deal closes. NII projected to grow at 39% CAGR over FY26-28E, boosted by strong capital ratios following the transaction.
Net profits estimated to grow approximately 4x over FY26-28E. That's ₹7 billion in FY25 potentially reaching ₹39 billion by FY28E. PAT CAGR of 168% from FY26 to FY27 alone.
NIM Expansion Path
Management has multiple levers. Yield on advances has bottomed out. Liability profile offers greater room for improvement as funding costs ease with the ENBD deal. Shift toward high-yielding segments like SME and mid-corporate will help. Improving mix of high-yielding secured loans adds to margins.
However, the recent 25bp repo cut in Dec'25 may create some near-term pressure.
Operating Leverage Coming Through
C/I ratio expected to moderate from 70.7% to approximately 61% by FY27E. The bank has made significant investments in retail products, underwriting, risk-monitoring, and digital capabilities. As these investments mature and retail secured assets turn profitable, operating leverage kicks in. PPoP estimated to clock 54% CAGR over FY26-28E.
Credit Cost Moderation
Expect credit cost to decline from 1.85% in FY26E to 1.6% by FY27E and 1.5% by FY28E. Early indicators like declining SMA book and improving forward flows support this view.
Asset Quality: The Recovery Story
Current State
Metric
2QFY25
2QFY26
Change
GNPA (%)
2.88
2.32
-56bp
NNPA (%)
0.79
0.57
-22bp
PCR (%)
73.0
75.9
+290bp
What's Improving for RBL Bank?
MFI collection efficiency has improved closer to normalcy in November 2025. Portfolio growth has resumed on an incremental basis. The declining SMA book and better forward flows indicate underlying asset quality is stabilizing.
What's Still Elevated?
Credit card and personal loan slippages remain high. Management expects this to normalize over the next couple of quarters. The aggressive provisioning policy in unsecured NPLs will keep provisioning elevated near-term.
Why ₹350 Target Price Makes Sense
RBL is valued at 1.3x FY27E Adjusted Book Value, arriving at ₹350.
Current Valuations
Metric
FY26E
FY27E
FY28E
P/E (x)
18.6
19.4
13.3
P/BV (x)
1.2
1.1
1.0
P/ABV (x)
1.2
1.1
1.1
At 1.1x FY27 book value with a transformational deal closing and approximately 4x profit growth over FY26-28E, the valuation looks reasonable. The dividend yield improves to 1.5-2.3% over this period.
Should You Buy RBL Bank Stock?
Here's the complete breakdown:
Reasons to Consider Buying
Transformational $3B investment by Emirates NBD provides strategic capital
Net worth to surge to ₹420-445B post deal
CET-1 ratio of approximately 35% post-transaction provides massive growth headroom
Credit market share can double from 0.5% to 1%
Asset quality recovering with GNPA down 56bp YoY
MFI collections normalizing in Nov'25
NIM improvement path visible with multiple levers
Approximately 4x profit growth estimated over FY26-28E
Access to GCC-India remittance corridor and NRI deposits
Risk-averse investors uncomfortable with elevated credit costs
Those seeking high current dividend yields
Investors who need immediate RoE improvement
The Bottom Line for RBL Bank
RBL Bank is a turnaround story with a massive strategic catalyst. The Emirates NBD deal is more than capital infusion, more like a complete transformation of the bank's competitive position, funding profile, and growth runway.
The near-term picture for credit card stress remains elevated, C/I ratio is high, and RoA is subdued. But the trajectory is clear: approximately 4x profit growth over FY26-28E, NIM expansion to 5.5%, and RoA improving to 1.6%.
At 1.1x FY27 book value, you're getting a bank with CET-1 of 35% post-transaction, access to GCC-India remittance flows, and a partner with 21.8% ROE. The risk-reward skews positive for patient investors.
The stock suits those with 12-18 month horizons who understand that banking turnarounds take time but can deliver meaningful returns when the pieces fall into place.
Frequently Asked Questions
1. What is RBL Bank's target price?
The target price is ₹350, representing 15% upside from ₹304. The target is based on 1.3x FY27E Adjusted Book Value, factoring in the transformational ENBD deal and approximately 4x profit growth over FY26-28E.
2. What is the Emirates NBD deal?
Emirates NBD will invest $3 billion for a 60% majority stake in RBL Bank, becoming the promoter. ENBD's India branches will also merge with RBL via share swap, taking the pro forma stake to 62%. Post-deal, RBL's net worth rises to ₹420-445 billion.
3. Is RBL Bank a good stock to buy?
RBL maintains a BUY rating for investors with 12-18 month horizons who can tolerate near-term volatility. The ENBD deal fundamentally changes the growth outlook. Key positives include massive capital infusion and profit growth trajectory. Key risks include elevated credit card stress and near-term margin pressure.
4. What is RBL Bank's asset quality status?
GNPA improved to 2.32% in 2QFY26, down 56bp YoY. NNPA stands at 0.57%. MFI collections have improved to near-normal levels in Nov'25. Credit card stress remains elevated but expected to ease over coming quarters.
5. What is RBL Bank's NIM outlook?
NIM stood at 4.51% in 2QFY26. Management expects 10-15bp improvement every quarter, reaching 4.7-4.8% by 4QFY26. Post-ENBD deal, NIMs could expand to 5.2% by FY27E and 5.5% by FY28E driven by lower funding costs and better asset mix.
6. What growth is expected in loans?
Advances are estimated to grow at 24% CAGR over FY26-28E, from ₹1.09 trillion to ₹1.74 trillion. Growth will be driven by MSME products, gold lending, SME, mid-corporate, tractors, and affordable housing.
7. How will profitability improve?
RoA expected to improve from 0.5% in FY25 to 1.4% by FY27E and 1.6% by FY28E. RoE projected at 8.4% by FY27E. The improvement comes from NIM expansion, operating leverage, and moderating credit costs.
8. What are the key risks for RBL Bank?
Near-term risks include elevated credit card slippages, high C/I ratio of 70.7%, CASA moderation to 31.9%, and integration execution with ENBD. The recent repo cut may also pressure margins in the short term.
Disclaimer:The companies mentioned in the article are for information purposes only. This is not investment advice.
